* Etisalat to buy Vivendi's 53 pct stake in Maroc Telecom
* Maroc Telecom leading wireless carrier in Morocco
* Adds fast growing West African countries to its portfolio
* Sale to help Vivendi focus on media business
By Matt Smith
DUBAI, Nov 5 Etisalat has agreed to
buy Vivendi's 53 percent stake in Maroc Telecom
for 4.2 billion euros ($5.7 billion), giving the Abu
Dhabi company control over the largest wireless carrier in
Morocco and a bigger footprint in sub-Saharan Africa.
The sale draws a line under months of negotiations as the
debt-laden French conglomerate slims down and sells
capital-intensive telecoms assets to focus on music and pay-TV
businesses that it believes have greater growth potential.
The deal also marks a return to acquisitions for Etisalat
following a pause to digest some problematic purchases, and
gives the largest telecoms firm in the Gulf a top position in
Morocco and access to Mauritania, Burkina Faso and Mali in
addition to the African countries where it is already present.
Maroc Telecom's operations in West Africa, with the
exception of Mauritania, performed strongly as mobile customer
numbers grew between 11 and 33 percent during the first nine
months of 2013. Etisalat's African operations
made a net loss in the third quarter as subscriber numbers fell.
Gulf Arab telecom operators like Etisalat and its
Qatar-based rival Ooredoo are on the prowl for
businesses outside their relatively small and saturated home
markets, where rising competition has pressured profitability.
The sale is subject to regulatory approvals and follows
protracted negotiations following Etisalat's initial bid in
January. Qatar's Ooredoo withdrew its offer in June.
Politics also played a crucial role in the decision, given
the north African kingdom owns 30 percent of Maroc Telecom.
Etisalat had promised to make Maroc Telecom the flagship of
its African operations and deploy Maroc Telecom executives
throughout Africa, sources familiar with the deal said in April.
"The deal does make sense in that it tallies with Etisalat's
goal of diversifying away from the UAE, while Maroc Telecom also
is a good fit geographically," said Matthew Reed, principal
analyst at Informa Telecoms and Media in Dubai.
RELIEF FOR VIVENDI
Confirmation of the deal comes as a relief to some Vivendi
investors since the disposal is necessary for the group to
continue its revamp by spinning off its struggling French
telecoms unit SFR.
Etisalat will pay Vivendi 3.9 billion euros for the stake,
plus a further 300 million euros in 2012 dividends from Maroc
Telecom, according to separate statements from the buyer and
seller on Tuesday. Vivendi said it expects the deal to be
completed by early 2014.
Morocco is one of Africa's most developed telecom markets,
with 120 percent mobile penetration, three fixed-line and mobile
providers and some of the lowest broadband prices on the
continent, according to consultants BuddeCom.
"Vivendi is selling a business that is ex-growth and has
declining margins with a shareholder set-up that is quite
complicated. I would say this was a good sale rather than a good
purchase," said Conor O'Shea, head of media sector research at
Kepler Capital Markets in Paris.
The Maroc deal will be Etisalat's first big purchase this
decade after spending about $12.6 billion on foreign
acquisitions from 2004 to 2009 that added little to its profits.
The United Arab Emirates' former monopoly already has
operations in 15 countries in the Middle East, Asia and Africa,
although its home market remains by far the most important,
accounting for 65 percent of third-quarter revenue.
Analysts say Etisalat has made a poor return on many of its
foreign units because it overpaid in some cases or bought
minority stakes in small players in crowded markets like India.
The company has changed most of its senior management in
recent years, recruiting foreign heads of marketing, finance and
strategy, and the Maroc deal suggests it has learned from
"There seems to be a plan for Maroc to be the managing unit
for all of Etisalat's sub-Saharan units, the idea being that
Maroc has done pretty well in that region," Informa's Reed said,
referring to Etisalat's operations in Ivory Coast, Benin, Togo,
Gabon, Niger and the Central African Republic.
Vivendi's shares were up 0.1 percent at 1346 GMT, while
Etisalat's rose 0.4 percent.
Lazard Ltd and Credit Agricole advised
Vivendi, BNP Paribas advised Etisalat and Bank of
America Merrill Lynch acted for Maroc Telecom. Moelis
and Co advised state-owned Emirates Investment Authority,
Etisalat's majority shareholder.